Florida Man Charged In Manhattan Federal Court With Concealing An Offshore Bank Account In Liechtenstein Worth More Than $1 Million

Preet Bharara, the United States Attorney for the Southern District of New York, and Shantelle P. Kitchen, Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service’s Criminal Investigation Division (“IRS”), announced today the unsealing of an indictment (the “Indictment”) charging HARRY FALTERBAUER, a United States citizen and resident of Florida, for failing to disclose a bank account worth more than $1 million that he maintained in Liechtenstein, and for lying to federal agents who questioned him about this offshore account.  FALTERBAUER was arrested this morning at his residence in Coconut Creek, Florida, and was presented in federal court in Fort Lauderdale, Florida.

Manhattan U.S. Attorney Preet Bharara said: “As alleged, in order to evade taxes, Harry Falterbauer hid from the U.S. authorities a million-dollar offshore bank account he maintained in Liechtenstein.  The indictment unsealed today is part of our ongoing efforts, with our partners at the IRS, to ensure that taxpayers do not use a foreign country’s bank-secrecy laws to avoid their tax obligations.”

IRS-CI Special Agent-in-Charge Shantelle P. Kitchen said:             “The Internal Revenue Service has made the investigation of individuals who allegedly conceal assets in offshore accounts and who willfully fail to report the income that those accounts generate a priority.  Such actions undermine our nation’s tax system and essentially make law abiding taxpayers pay more than their fair share.  In a similar way, individuals who allegedly lie to government investigators undermine our nation’s justice system.  As a law enforcement agency, IRS-CI will pursue the prosecution of anyone who lies to a Special Agent during the course of a criminal investigation.”

According to the allegations contained in the Indictment unsealed today in Manhattan federal court[1]:

From approximately 1988 to 2008, FALTERBAUER maintained an undeclared bank account at Liechtensteinische Landesbank AG, a bank based in Vaduz, Liechtenstein (“LLB-Vaduz”).  FALTERBAUER opened the account in his own name, presenting his United States passport so LLB-Vaduz could verify his identity.  To conceal the connection to FALTERBAUER, the bank then referred to the account exclusively by its account number.  In an affidavit provided to the bank in 2003, FALTERBAUER declared that he was a United States citizen and that he was not authorizing LLB-Vaduz to disclose his name to U.S. tax authorities.

The undeclared account generated capital gains and losses from investments.  It reached a high balance of more than $1.5 million in approximately 2007, and had a balance of more than $1.1 million before its closure in 2008.

For the calendar year 2008, FALTERBAUER willfully failed to disclose on his tax returns both his interest in the offshore account and the income that account generated.  For the same year, FALTERBAUER also willfully failed to file with the IRS a Report of Foreign Bank and Financial Accounts, or FBAR, as the law required him to do.

In 2012, Liechtenstein amended its laws to permit banks to produce documents relating to certain United States taxpayers to the Department of Justice.  LLB-Vaduz subsequently provided files from undeclared accounts, including FALTERBAUER’s, to this Office.

IRS Special Agents from Manhattan interviewed FALTERBAUER about the undeclared account in or about April 2013.  During that interview, FALTERBAUER falsely stated that he had not opened an account at LLB-Vaduz.  After being shown documents indicating otherwise, FALTERBAUER falsely stated that he never reported the account to the IRS because he had opened it for another person whose identity he did not know.

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FALTERBAUER, 59, of Coconut Creek, Florida, is charged with willful failure to disclose an offshore bank account for the calendar year 2008, and with making false statements to IRS Special Agents.  Each charge carries a maximum sentence of five years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Bharara praised the outstanding investigative work of IRS-CI.  Mr. Bharara also thanked the U.S. Department of Justice’s Tax Division for its assistance.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Sarah Paul and David Abramowicz are in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.